Why We Shouldn’t be Selling the Right to Live in America

America is having a fire sale. Why not sell wealthy foreigners the right to live here, too?

That’s the notion behind a bill introduced last week by Republican Senator Mike Lee of Utah and Democrat Senator Charles Schumer of New York: Stoke demand for American homes by allowing foreign nationals to buy them. In return, give foreigners the right to live here (although not work here).

The price? At least $500,000 cash. It could be one piece of real estate costing $500,000 or more, or several, of one would have to be worth at least $250,000.

Presumably, this would help homeowners by boosting demand. “This is a way to create more demand without costing the federal government a nickel,” Schumer told the Wall Street Journal.

And it would help the Street. Rather than have the big banks carry all those non-performing mortgage loans on their books or be forced to write them down, we’ll just goose the housing market by selling off the right to live in America.

And the measure wouldn’t allow in the world’s riff-raff, because buyers would have to be rich enough to pay cash, and live here six months a year without working.

Realtors love it. Says Glenn Kelman, CEO of Redfin, an online brokerage firm, “when property values sag and this is a desirable place to live, one of the simplest solutions is just to let more people in so they can buy the homes.”

In Seattle, where Kelman lives, housing prices have slumped – as they have all over America. But Vancouver, Canada – just 140 miles to the north – is enjoying a housing boom because Canada allows foreigners to buy their way into Canada, just as the Lee-Schumer bill would do here.

But wait a minute.

Rich foreigner buyers may be a boon to American homeowners looking to sell, because those homeowners can’t find Americans willing and able to fork over as much money as the sellers would like.

But what about American home buyers – many of them young, just entering the market – who would prefer low home prices that aren’t bid upward by rich foreigners? It’s not altogether obvious why we should favor American homeowners over American home buyers.

The visa-for-home swap proposal also comes at exactly the same time the nation is actively closing its doors to foreigners who aren’t wealthy. Is this what America is all about?

Policy makers have tightened eligibility for entering the country legally. Student visas are harder to obtain. Family members are waiting years to become resident aliens. Green cards are in short supply.

Meanwhile, many states are doing whatever they can to make immigrants – mostly poor, but legal as well as illegal – feel unwelcome. For example, Alabama and Arizona allow police to demand “papers, please” from anyone they suspect may be undocumented (read: anyone who looks Hispanic). Alabama requires public schools to demand documentation from parents of all children in K-12 programs.

The nation is expelling record numbers of undocumented workers. Over the last year (from October 1, 2010 to October 31, 2011), almost 400,000 people were deported – the largest number in the history of the Federal Immigration and Customs Enforcement Agency. Annual deportations have increased 400 percent since 1996.

Some of these people committed criminal acts in the United States but a significant number simply overstayed their visas. Others had been in America for decades, working and raising their families here. Some had even been here legally but had no opportunity to defend themselves. A recent report by my colleagues at the Berkeley Law School notes that many immigrants “are pushed rapidly through the system without appropriate checks or opportunities to challenge their detention and/or deportation.”

If the Schumer-Lee bill becomes law, the easiest way for a foreigner to live in America will be to plunk down $500,000 for a piece of property.

Maybe we should rewrite Emma Lazarus’s words on the Statue of Liberty:

About Robert Reich

Robert B. Reich is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written eleven books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet, and his most recent book, Supercapitalism. His articles have appeared in the New Yorker, Atlantic Monthly, New York Times, Washington Post, and Wall Street Journal. Mr. Reich is co-founding editor of The American Prospect magazine.

Reich has been a member of the faculties of Harvard’s John F. Kennedy School of Government and of Brandeis University. He received his B.A. from Dartmouth College, his M.A. from Oxford University, where he was a Rhodes Scholar, and his J.D. from Yale Law School.

Comments

Reich may be right to lament the moral implications of the Lee-Schumer proposal, but he seems not to have done his numbers homework to correctly assess its practical effect. How many rich foreigners would in fact take advantage of the buy-into-USA program, vs the entire size of the USA housing market? Likely there will be very few foreign rich; their effect on the basic USA home market will be minimal.

Reich’s example of Vancouver (BC Canada) is a bogeyman. The Vancouver housing boom is a very special case. Vancouver is Canada’s far-and-away most attractive urban destination in terms of geographical, cultural and climate amenities: the country’s one and only equivalent to the USA’s Seattle+Portland+San Francisco+LA+San Diego+ Honolulu. So Vancouver got to be a number one destination within democratic English-speaking lands (with easier entry than the USA) for prosperous overseas Chinese, especially for those in the late 1990s faced with the need to quit a Hong Kong facing an uncertain future under the pending mainland takeover. Vancouver has worked for them, and the rest has been history.

Wellness

Carole Bartolotto: The problem with concluding that GMOs are safe is that the argument for their safety rests solely on animal studies. These studies are offered as evidence that the debate over GMOs is over. Nothing could be further from the truth.

Environmentalism

Walker Foley: Elected officials seem to think there’s only one side of this property rights argument. The people who live in these communities have rights too, but the oil companies seem to have the jump on [the politicians’] side of the fence.